The Economics Of Drug Cartels

May 5, 2013 in Daily Bulletin

A little under a year ago Patrick Radden Keefe wrote an in depth piece about the operations of drug cartels. A few of the very many highlights include:

  • Custom built submarines, FedEx, and air conditioned trolley tunnels are all ways that narcotics make their way into the United States.
  • Some arrested drug traffickers demand a receipt from the authorities for the drugs that were taken from them so that they can prove to their masters that they didn’t steal or consume the drugs.
  • It’s even possible to buy insurance policies that protect against seizure.
  • Other sophisticated financial products include lines of credit given to drug retailers who can’t afford to pay for the upfront cost of the product.
  • While drug cartels don’t pay taxes the amount that they have to pay in bribes is likely equal to that of the corporate tax rate in Mexico.
  • These bribes mean that even when they are arrested traffickers live cushy lives. One prisoner ordered his meals from a menu, had prostitutes delivered to him, and managed his drug affairs with a cell phone while in prison.
  • Many of those who are a part of the drug organizations are also members of the police. They conduct their business in their police uniforms – sometimes even openly killing people.
  • In contrast, when (honest) officers make a drug bust, they make sure to cover their face before appearing in front of cameras to ensure that their families aren’t targeted. Thus the cops dress like thieves while the thieves dress like cops.
  • Getting drugs into the United States is only half the battle. The other half is exporting the cash back out of it and into the pockets of the cartels.
  • And there is a lot of cash. A kilo of drugs that is bought for $2,000 can retail for up to $100,000 in the United States.

Read more about how marriages are used to ensure loyalty, the Mexican cities where every cab-driver is on the payroll, where the cartels invest their money, and much, much more over here.

Source: The New York Times